Danielsen v. Burnside-Ott Aviation Training Center, Inc.

Decision Date16 August 1991
Docket NumberNo. 90-5304,BURNSIDE-OTT,90-5304
Citation941 F.2d 1220
Parties30 Wage & Hour Cas. (BNA) 899, 291 U.S.App.D.C. 303, 60 USLW 2148, 119 Lab.Cas. P 35,518, RICO Bus.Disp.Guide 7808, 37 Cont.Cas.Fed. (CCH) P 76,157 Lloyd T. DANIELSEN, et al., Appellants, v.AVIATION TRAINING CENTER, INC., et al.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (Civil Action No. 89-3142).

Charles E. Raley, with whom James E. Phillips was on the brief, for appellants.

Richard McMillan, with whom Scott L. Winkelman was on the brief, for appellee Dyncorp.

Jerrold Ganzfried, with whom Harvey G. Sherzer was on the brief, for appellees UNC Inc., UNC Support Services, and Burnside-Ott Aviation Training Center, Inc.

William Fitzhugh Fox, Bruce C. O'Neil, and Diane Slomowitz entered appearances for appellees William V. Ott, Robert C. Ott, et al.

Before EDWARDS, SENTELLE, and HENDERSON, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge:

Appellants, employees of service corporations contracting with the United States, brought suit against their employers and others in a five-count complaint alleging four claims for relief under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968, and a pendent common law fraud claim. We review the judgment of the United States District Court for the District of Columbia granting a motion to dismiss all counts. The District Court held that the facts alleged in the purported RICO actions fell within the Service Contract Act, 41 U.S.C. § 351 ("SCA"), and that the administrative remedy provided by that Act was an exclusive one, barring any private civil action. As this ruling left the court without jurisdiction over the pendent claim, the court dismissed the entire complaint. Because we agree with the trial judge that the remedy provided in the SCA is exclusive, and because we further conclude that the complaint states no claim for which relief can be granted under RICO, we affirm.

I. BACKGROUND
A. The Statutory and Regulatory Framework

Our disposition of this appeal involves the construction of two largely unrelated statutory schemes: the Service Contract Act, 41 U.S.C. § 351, and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968. We begin with a brief overview of each statute and the regulations promulgated pursuant to the SCA to provide an understanding of our analysis.

1. The Service Contract Act

In 1965, prior to the enactment of the SCA, some statute establishing labor standards covered each major category of federal contracts except service contracts. The earliest example of this type of legislation is the Davis-Bacon Act, 40 U.S.C. § 276, et seq. Since 1931, that Act, though amended several times, has governed the rate of wages for laborers and mechanics working under federal government contracts "for construction, alteration and/or repair ... of public buildings or public works." 40 U.S.C. § 276a(a). It provides that advertised specifications for each such contract, in excess of a statutory minimum dollar amount of $2,000, shall contain a minimum wage provision based upon the Secretary of Labor's determination of wages "prevailing for the corresponding classes of laborers and mechanics" in the area in which the work is to be performed. Id. Since 1936, the Walsh-Healy Public Contracts Act has provided similar protection to employees of contractors under government supply contracts of $10,000 or more. 41 U.S.C. §§ 35-45 (1988).

In 1965, Congress determined that "the service contract is the only remaining category of Federal contracts to which no labor standards protection applies." S.Rep. No. 798, 89th Cong., 1st Sess. 1 (1965), U.S.Code Cong. & Admin.News 1965, p. 3737. To correct this perceived omission, Congress enacted the McNamara-O'Hara Service Contract Act, a labor standards statute applicable to service contracts. See 41 U.S.C. §§ 351-358 (1988). That Act requires every federal government contract exceeding $2,500 (with exceptions not relevant here), "the principal purpose of which is to furnish services ... through the use of service employees," to contain minimum wage provisions for each class of service employees in the performance of the contract. 41 U.S.C. § 351(a). More specifically, the SCA provides that contracts and bid specifications must contain "(1) a provision specifying the minimum monetary wages to be paid the various classes of service employees" and "(2) a provision specifying the fringe benefits to be furnished the various classes." 41 U.S.C. § 351(a)(1) and (2). As to each such provision, the statute requires the Secretary of Labor to make a determination of the applicable minimum wages and fringe benefits based on prevailing rates in the locality of the performance of the contract. Id.

In pursuance of her duties under the statutory scheme, the Secretary of Labor has promulgated an extensive body of regulations. The whole of Part 1 of Title 29 of the Code of Federal Regulations and Appendices A-C thereto set the "Procedures for Predetermination of Wage Rates." 29 C.F.R. §§ 1.1-1.9. This part applies to the SCA as well as Davis-Bacon, Walsh-Healy, and 55 other statutes listed in Appendix A to the regulations, all of which require the determination of minimum wages for the protection of workers under federal or federally assisted contracts. Among other things, the regulations in Part 1 provide for a procedure under which the contracting federal agency requests from the Secretary a determination of prevailing wages in the locality where the work will be performed.

Section 1.6 sets forth in detail (almost three pages, two columns each) the use and effectiveness of the wage determinations. Section 1.8 provides the procedure for any interested party to seek reconsideration of a wage determination by the Administrator of the Wage and Hour Division, Employment Standards Administration of the Department. Section 1.9 provides for an appeal from the Administrator's decision to the Wage Appeals Board. Sections 4.50-4.55 review the methodology by which the Administrator makes the wage and fringe benefit determinations pursuant to §§ 1.1-1.7 and reconsiders the same under § 1.8. Several other subparts and sections of Title 29 C.F.R. apply to the relevant wage determinations, including §§ 8.2-8.6 concerning the review of wage determinations and §§ 8.7-8.9 providing further procedures for appeal of determinations.

The greater portion of Part 7 of Title 29 of the C.F.R., §§ 7.1-7.8 and §§ 7.11-7.18, governs the procedure and methodology for review by the Wage Appeals Board. Also, subpart C of subtitle A of 29 C.F.R. §§ 4.101-4.156 governs the "application of the McNamara-O'Hara Service Contract Act;" subpart D, §§ 4.159-4.186, governs the compensation standards; and subpart E, §§ 4.187-4.191, governs enforcement, including: § 4.187, recovery of underpayments; § 4.188, debarment; § 4.189, administrative proceedings relating to enforcement of labor standards; § 4.190, contract cancellation; and § 4.191, complaints and compliance assistance.

All contracts involved in the present litigation are within the scope of the SCA and the implementing regulations.

2. The Racketeer Influenced and Corrupt Organizations Act

Congress enacted the RICO statute, 18 U.S.C. §§ 1961-1968, as Title IX of the Organized Crime Control Act of 1970, Pub.L. No. 91-452, 84 Stat. 922 (1970) ("OCCA"). After extensive hearings and investigations presided over by Senator McClelland, a principal sponsor of the legislation, Congress in the OCCA sought to combat criminal organizations at large in the American commercial republic. Title IX, RICO, was designed specifically to remove the tentacles of organized crime from legitimate business. See generally Lynch, RICO: The Crime of Being a Criminal, 87 COLUM.L.REV. 920, 972-73 (1987). As an administration official testifying in support of the adoption of RICO--with the blessings of Senator McClelland--stated during hearings on the bill, RICO was drafted with the intention of providing "devices [that] can prove effective in cleaning up organizations corrupted by the forces of organized crime." 116 Cong.Rec. 18,939-40 (1970).

The principal operative section of RICO, 18 U.S.C. § 1962, creates four new federal crimes. While we will examine the details of each offense as it relates to the allegations in the present case in Part II of this opinion, the following provides a brief review of § 1962: Subsection (a) renders unlawful the acquisition of any interest in or the establishment or operation of an "enterprise" (as defined in the statute) with the proceeds of a "pattern of racketeering activity." 18 U.S.C. § 1962(a). Subsection (b) outlaws acquiring or maintaining an interest in or control of an enterprise "through a pattern of racketeering activity." Id. § 1962(b). Subsection (c), the subsection most litigated, outlaws the conduct of affairs of an enterprise (under circumstances outlined in the statute) "through a pattern of racketeering activity." Id. § 1962(c). Subsection (d) adds nothing substantive to the law. Rather, it makes it unlawful to conspire to violate any of the preceding three sections. Id. § 1962(d).

The alleged applicability of RICO to the present case comes about through 18 U.S.C. § 1964, entitled "Civil Remedies." This section provides in relevant part:

[A]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee.

18 U.S.C. § 1964(c).

Each offense under § 1962, and therefore each civil claim under § 1964(c), requires as an element "a pattern of racketeering activity." Section 1961, the...

To continue reading

Request your trial
128 cases
  • Koren v. Martin Marietta Services, Inc., Civil No. 96-1696(JP).
    • United States
    • U.S. District Court — District of Puerto Rico
    • 6 de março de 1998
    ...531, 533 (9th Cir.1997); Lee v. Flightsafety Servs. Corp., 20 F.3d 428, 431 (11th Cir.1994); and Danielsen v. Burnside-Ott Aviation Training Ctr., Inc., 941 F.2d 1220, 1228 (D.C.Cir.1991). That does not mean, however, that the SCA has preempted the service contract field in the constitution......
  • U.S. v. Thomas
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • 3 de junho de 1997
    ...conspiracy should apply to § 1962(d) is in accord with this court's pre-Reves statement in Danielsen v.Burnside-Ott Aviation Training Center, Inc., 941 F.2d 1220, 1224 (D.C.Cir.1991) (dictum), that Congress did not intend in § 1962(d) to create a new substantive offense: "[§ 1962(d) ] adds ......
  • Sadighi v. Daghighfekr
    • United States
    • U.S. District Court — District of South Carolina
    • 22 de janeiro de 1999
    ...437-38 (9th Cir.1992); Parker & Parsley Petroleum v. Dresser Indus., 972 F.2d 580, 584 (5th Cir.1992); Danielsen v. Burnside-Ott Training Ctr., 941 F.2d 1220, 1229-30 (D.C.Cir.1991); Ouaknine v. MacFarlane, 897 F.2d 75, 82 (2d Cir.1990); Grider v. Texas Oil & Gas Corp., 868 F.2d 1147, 1149-......
  • Black Diamond Land Mgmt., LLC v. Twin Pines Coal Co.
    • United States
    • U.S. District Court — Northern District of Alabama
    • 6 de julho de 2016
    ...516 U.S. 1009 (1995); Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1189-90 (3d Cir. 1993); Danielsen v. Burnside-Ott Aviation Training Ctr., 941 F.2d 1220, 1230-31 (D.C. Cir. 1991)) (emphasis in original); accord Club Car, Inc. v. Club Car (Quebec) Import, Inc., 276 F. Supp. 2d 1276, 1......
  • Request a trial to view additional results
9 books & journal articles
  • Racketeer influenced and corrupt organizations
    • United States
    • American Criminal Law Review No. 60-3, July 2023
    • 1 de julho de 2023
    ...Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1188 (3d Cir. 1993) (same); Danielsen v. Burnside-Ott Aviation Training Ctr., 941 F.2d 1220, 1230 (D.C. Cir. 1991) (f‌inding allegations that contractors intentionally underpaid minimum wages failed to allege injury arising from use or inves......
  • Racketeer influenced and corrupt organizations.
    • United States
    • American Criminal Law Review Vol. 45 No. 2, March 2008
    • 22 de março de 2008
    ...enterprise, distinct from any injuries caused by predicate acts of racketeering); Danielsen v. Burnside-Ott Aviation Training Ctr., 941 F.2d 1220, 1230 (D.C. Cir. 1991) (finding that employees' allegations that contractors intentionally underpaid legally required minimum wages failed to all......
  • Racketeer Influenced and Corrupt Organizations
    • United States
    • American Criminal Law Review No. 59-3, July 2022
    • 1 de julho de 2022
    ...acts of racketeering); Glessner v. Kenny, 952 F.2d 702, 708 (3d Cir. 1991) (same); Danielsen v. Burnside-Ott Aviation Training Ctr., 941 F.2d 1220, 1230 (D.C. Cir. 1991) (f‌inding employees’ allegations that contractors intentionally underpaid legally required minimum wages failed to allege......
  • Racketeer influenced and corrupt organizations.
    • United States
    • American Criminal Law Review Vol. 42 No. 2, March 2005
    • 22 de março de 2005
    ...enterprise, distinct from any injuries caused by predicate acts of racketeering); Danielsen v. Burnside-Ott Aviation Training Ctr., 941 F.2d 1220, 1230 (D.C. Cir. 1991) (finding allegations by employees of Navy aircraft maintenance contractors that contractors intentionally underpaid legall......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT